CFA Practice Question

There are 206 practice questions for this study session.

CFA Practice Question

When the underlying stock price is $95, an investor pays $2 for a call option with an exercise price of $95. If the stock price moves to $96, the intrinsic value of the call option would be closest to ______.
A. $0
B. $1
C. $2
Explanation: The intrinsic value of a call option is the stock price less the strike price if that difference is positive, and zero otherwise. The stock trading at $96 can be purchased for $95, so the intrinsic value is $1.

User Contributed Comments 2

User Comment
jatins21 got it
CFANathan Nods head
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